<PAGE>   1
                                  UNITED STATES
                             SECURITIES AND EXCHANGE
                                   COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

                    For the Fiscal Year Ended August 31, 1997



    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                 For the transition period from ______ to ______

                         COMMISSION FILE NUMBER: 0-18091


                               RSI HOLDINGS, INC.
                 (Name of small business issuer in its charter)

         North Carolina                                     56-1200363
(State or other jurisdiction of                        (I. R. S. Employer
incorporation or organization)                         Identification No.)

           Post Office Box 6847, Greenville, South Carolina   29606
               (Address of principal executive offices)     (Zip Code)

Issuer's telephone number (864) 271-7171

Securities registered under Section 12(b) of the Exchange Act:

                                            (Name of each exchange on
         (Title of each class)               which registered)

                  None                                  None

Securities registered pursuant to Section 12(g) of the Exchange Act:

                                (Title of Class)

Common Stock, par value $.01

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.  Yes X No

         Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [x]


<PAGE>   2

         State issuer's revenues for its most recent fiscal year.

                  The issuer's revenues from operations during fiscal year 1997
                  were $270,000.

         State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and ask prices of such stock, as of a specified date within
the past 60 days. The aggregate market value of the voting stock held by
non-affiliates as of November 12, 1997 was $2,561,882.

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: November 18, 1997

         Common Stock, par value                   7,900,822 shares outstanding
         $.01 per share

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Company's definitive Proxy
Statement, to be filed pursuant to Regulation 14A for the annual shareholders'
meeting currently scheduled to be held on January 15, 1998, are incorporated by
reference into Part III.

         Transitional Small Business Disclosure Format: Yes    No  X



<PAGE>   3


PART I.

Item 1. Description of Business

         RSI Holdings, Inc. (the "Company") was incorporated in North Carolina
in 1978 and until July of 1994 was engaged in the sale of turf care equipment
and supplies. The Company had three wholly-owned subsidiaries, RSI Holdings of
Florida, Inc. ("RSI Florida"), Sunbelt Distributors, Inc. ("Sunbelt"), and
Wiegmann & Rose International Corp. ("Wiegmann & Rose"). In July 1994, its
primary supplier notified the Company that it would no longer be authorized to
sell its products. As a result, the Company ceased substantially all of its
existing business operations by August 31, 1994 and during the fiscal years
ended August 31, 1995 and 1996 the Company and its wholly-owned subsidiaries
completed the sale of substantially all of its assets.

         On November 4, 1996, the Company purchased the outstanding common stock
of CambridgeBanc, Inc., a small specialized consumer finance business that
originates and sells consumer finance receivables, substantially all of which
are loans secured by liens on improved property. On March 18, 1997, the name of
CambridgeBanc, Inc. was changed to HomeAdd Financial Corporation ("HomeAdd").

         Through HomeAdd, the Company makes debt consolidation and home
improvement loans secured by second and third mortgages to customers in South
Carolina and North Carolina. These loans are sold on the secondary market.
HomeAdd's primary means of advertising is through direct mail solicitation. The
Company competes with finance companies, banks and other financial institutions,
many of which also solicit loan business through direct mail solicitation. Many
of its competitors are substantially larger and have significantly greater
capital, experience and other resources than the Company. Because many of the
Company's competitors are much larger these competitors are able to spend much
more for advertising in the markets in which the Company operates. In addition
to direct mail solicitations, these competitors advertise through various other
advertising media.

         The Company does not have the financial resources to make the loans and
hold them until their maturity, thus the Company is dependent upon a limited
number of purchasers of the loans. Currently the Company primarily sells to two
wholesale lenders, but is approved to sell loans to seven wholesale lenders.
Most of the Company's competitors generate a greater volume of loans than the
Company and this gives the competitors an advantage when dealing with the loan
purchasers. The Company attempts to compete primarily on the basis of service
and competitive pricing. The Company believes that it is presently a relatively
small competitor in its market.

         The Company is approved under the Federal Housing Administration
("FHA") as a FHA Title I lender and accordingly must comply with Federal
regulations for FHA Title I lenders. In addition, HomeAdd must comply with
regulations of various States. Changes in Federal and State regulations as well
as changes in the interpretation of existing Federal and State regulations could
create an environment in which HomeAdd would not be able to operate. For further
information about the operations of HomeAdd, see Part II, Item 6, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," which
is incorporated herein by reference.

         The Company's executive offices were located at 245 East Broad Street,
Greenville, South Carolina 29601 through August 31, 1997, but moved to 28 East
Court Street, Greenville, South Carolina, 29601 during September 1997. Its
telephone number is (864) 271-7171. At August 31, 1997 the Company and its
operating subsidiary had a total of fourteen (14) full time employees.


<PAGE>   4

Activities During Fiscal Years 1996 and 1995

         During the fiscal years ended August 31, 1996 and 1995, the Company
substantially completed the sales of substantially all of its assets. As of
August 31, 1997, the Company's remaining owned real property (a former branch
facility) was located in Tampa, Florida. On November 19, 1997, this property was
sold. For a discussion of the terms of sale of the Tampa property that has not
yet been sold, reference is made to Part II, Item 6, "Management Discussion and
Analysis - Anticipated Liquidity Requirements," which is incorporated herein by
reference.

Wiegmann & Rose International Corp.

         Wiegmann & Rose International Corp., a South Carolina corporation, and
a wholly owned subsidiary of the Company, ceased doing business in October 1986.
Prior to this time, Wiegmann & Rose was principally engaged in the fabrication
and repair of shell and tube heat exchangers, pressure vessels and related
equipment. The Company discontinued the Wiegmann & Rose business segment in
1986. Further information regarding Wiegmann & Rose, contained under the
subheading "Legal Proceedings" in Part I, Item 3 hereof is incorporated herein
by reference.

Environmental Matters

         The Company is subject to federal, state and local environmental laws
and regulations. Information contained under the subheading "Legal Proceedings"
in Part I, Item 3 is incorporated herein by reference. As discussed under the
subheading "Legal Proceedings", the Company paid $300,000 in connection with
environmental matters at the property formerly owned by Wiegmann & Rose.


<PAGE>   5


Item 2. Description of Property

         During fiscal year 1997 the Company leased approximately 1,545 square
feet of floor space at 245 East Broad Street, Greenville, South Carolina used
for the Company's principal executive offices under a month-to-month lease
arrangement. During fiscal year 1997 the monthly rental was $885. The office
space at 245 East Broad Street, Greenville, South Carolina was leased from Micco
Corporation. Micco Corporation is owned by four shareholders, all of whom are
beneficial owners of more than 5% of the outstanding common stock of the
Company. One of the shareholders is a Vice President and former director of the
Company. One of the shareholders is the spouse of the Chairman of the Board of
Directors and Chief Executive Officer of the Company and the other three
shareholders are her adult children. The Company believes that this lease
contains provisions as favorable to the Company as could be obtained from a
third-party landlord.

         During September of 1997, the Company moved its executive offices to a
facility consisting of approximately 3,000 square feet of floor space located at
28 East Court Street, Greenville, South Carolina. The Company believes that the
property is adequate and suitable for executive office space. The monthly rental
expense to be incurred by the Company beginning in September of 1997 is $2,250
under a month-to-month lease arrangement. The lease at 28 East Court Street,
Greenville, South Carolina includes office furniture and equipment. The office
space at 28 East Court Street, Greenville, South Carolina is leased from CTST,
LLC. CTST, LLC is owned by three shareholders, all of whom are beneficial owners
of more than 5% of the outstanding common stock of the Company. One of the
shareholders is a Vice President and former director of the Company and the
other two shareholders are his adult siblings. The Company believes that this
lease contains provisions as favorable to the Company as could be obtained from
a third-party landlord.

         Under the terms of a sublease agreement dated November 4, 1996, HomeAdd
leased office and warehouse space containing approximately 3,000 square feet at
1200 Woodruff Road, Greenville, South Carolina for a period of one year. The
monthly rent through October of 1997 was $1,757. During September of 1997,
HomeAdd relocated to a facility at 850 South Pleasantburg Drive, Greenville,
South Carolina containing approximately 3,100 square feet of finished office
space. The Company believes that this office location is adequate and suitable
for its intended use as an office facility. The monthly rental under a five-year
lease arrangement expiring September of 2002 is $4,167.

         The Company leases an office facility in Shelby, North Carolina at $350
per month under an arrangement that expires December 31, 1997. The Company
expects to continue the lease of the Shelby location during fiscal year 1998.
The Company believes that this office is adequate and suitable for its intended
use.

         During fiscal year 1997, RSI Florida owned 2.03 acres of land and a
22,000 square foot building in Tampa, Florida. The Tampa, Florida property was
leased to Tresca Industries, a turf equipment dealer, on a month-to-month basis
for $2,400 per month (an annual rental rate of approximately $1.31 per square
foot) terminable on 90 days' notice, pursuant to which the Company was
responsible for the payment of utilities, taxes and building insurance. Property
taxes for 1997 were $8,452. The Company believes that its insurance coverage on
the Tampa property was adequate. During fiscal year 1997, the Tampa property was
held for sale and thus was not subject to depreciation for financial statement
purposes. On November 19, 1997, the Tampa property was sold. For a discussion of
the terms of the sale, see Part II, Item 6, "Management's Discussion and
Analysis of Financial Condition and Results of Operations."


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         The Company has no plans to invest in real estate or persons engaged
primarily in real estate activities, nor does it have any formal policy with
respect to such investments. As discussed in Part II, Item 6 "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
HomeAdd makes second and third mortgages in the ordinary course of business;
however, HomeAdd attempts to sell the mortgages promptly in the secondary
market. The Company has no formal investment policy with regard to real estate
mortgages; however, the Company does not intend to invest in real estate
mortgages other than in the ordinary course of business.


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Item 3. Legal Proceedings

Wiegmann & Rose

         Environmental Litigation

         On November 18, 1996, Wiegmann & Rose International Corp. ("Wiegmann &
Rose"), a wholly-owned subsidiary of the Company, entered into an agreement to
settle a lawsuit brought by Triple A Machine Shop, Inc. ("Triple A"). The
lawsuit related to environmental contamination on property formerly owned by
Wiegmann & Rose and sold to Triple A in 1987. Pursuant to the settlement
agreement Wiegmann & Rose paid to Triple A the sum of three hundred thousand
($300,000) dollars. In addition to the settlement of the lawsuit, Triple A
released Wiegmann & Rose and the Company from any further liability to Triple A
in connection with the property or under the agreement made at the time of sale
of the property to Triple A.

         Asbestos Litigation

         Wiegmann & Rose is also one of numerous defendants with respect to
seven claims for exposure to asbestos, arising in the normal course of business.
All seven of these claims have been dismissed without prejudice with respect to
Wiegmann & Rose, and the applicable statute of limitations has passed with
respect to at least two of the dismissed claims. The dismissed claims are made
in the following lawsuits, in each case seeking unspecified damages for injury
allegedly due to asbestos exposure: (i) Brophy v. Abex et al. (filed April 9,
1992), pending in the San Francisco, California Superior Court, seeks damages
for wrongful death allegedly due to asbestos exposure. Wiegmann & Rose has been
dismissed without prejudice in this action and the applicable statute of
limitations has now run, barring any subsequent action by the plaintiff against
Wiegmann & Rose. (ii) Canga v. Abex et al. (filed March 18, 1993), pending in
the San Francisco Superior Court, seeks damages for personal injuries allegedly
due to asbestos exposure. Wiegmann & Rose has been dismissed without prejudice
in this action. Recent case law, interpreting the asbestos statute of
limitations statutory provision, suggests that plaintiff now may be foreclosed
from filing suit against the Company. In any event, even if the Company could be
brought back into the litigation, the Company continues to believe that it is
unlikely that plaintiff would do so given the number of relatively "deep pocket"
defendants in the case. (iii) Jordison v. Abex et al. (filed January 21, 1994),
pending in the San Francisco Superior Court, seeks damages for personal injuries
allegedly due to asbestos exposure. The case against Wiegmann & Rose has been
dismissed without prejudice. Recent case law, interpreting the asbestos statute
of limitations statutory provision, suggests that plaintiff now may be
foreclosed from filing suit against the Company. In any event, even if the
Company could be brought back into the litigation, the Company continues to
believe that it is unlikely that plaintiff would do so given the number of
relatively "deep pocket" defendants in the case. (iv) Barnes v. Abex et al.
(filed December 3, 1993), pending in the San Francisco Superior Court, seeks
damages for wrongful death allegedly due to asbestos exposure. The case against
Wiegmann & Rose has been dismissed without prejudice, and the applicable statute
of limitations has run, barring any subsequent action by plaintiff against
Wiegmann & Rose. (v) Richardson v. Abex et al. (filed July 20, 1993), pending in
the San Francisco Superior Court, seeks damages for personal injuries allegedly
due to asbestos exposure. The case against Wiegmann & Rose has been dismissed
without prejudice. Recent case law, interpreting the asbestos statute of
limitations statutory provision, suggests that plaintiff now may be foreclosed
from filing suit against the Company. In any event, even if the Company could be
brought back into the litigation, the Company continues to believe that it is
unlikely that plaintiff would do so given the number of relatively "deep pocket"
defendants in the case. (vi) Sorensen v. Abex et al. (filed July 20, 1993),
pending in 

<PAGE>   8

the San Francisco Superior Court, seeks damages for personal injuries allegedly
due to asbestos exposure. The case against Wiegmann & Rose has been dismissed
without prejudice. Recent case law, interpreting the asbestos statute of
limitations statutory provision, suggests that plaintiff now may be foreclosed
from filing suit against the Company. In any event, even if the Company could be
brought back into the litigation, the Company continues to believe that it is
unlikely that plaintiff would do so given the number of relatively "deep pocket"
defendants in the case. (vii) Hall v. Abex et al. (filed February 25, 1994),
pending in the San Francisco Superior Court, seeks damages for personal injuries
allegedly due to asbestos exposure. The case against Wiegmann & Rose has been
dismissed without prejudice. Recent case law, interpreting the asbestos statute
of limitations statutory provision, suggests that plaintiff now may be
foreclosed from filing suit against the Company. In any event, even if the
Company could be brought back into the litigation, the Company continues to
believe that it is unlikely that plaintiff would do so given the number of
relatively "deep pocket" defendants in the case.

         As to the substantive nature of the asbestos claims, the Company
believes that if it could be brought back into the litigation, that valid
defenses would be available. The Company also believes that this is the reason
that the Company has been successful in having all seven of these filed actions
dismissed without prejudice against Wiegmann & Rose.

         No actions involving asbestos are currently pending.

         Insurance

         The Company has been reimbursed for substantially all of its defense
costs relating to the environmental and asbestos claims against Wiegmann & Rose
described above, under a reservation of rights, by its two primary insurance
companies. The Company is seeking reimbursement of the $300,000 settlement
discussed above, but there can be no assurance that insurance coverage will be
available to reimburse the Company for the $300,000 settlement. Presently, the
Company and Wiegmann & Rose's insurance carriers are attempting to negotiate a
settlement of this claim. If no settlement is reached, the Company and/or
Wiegmann & Rose's insurance carrier may initiate litigation to resolve the
reimbursement claim.

         Holiday Inns, Inc. Litigation

         RSI Corporation (now Delta Woodside), the former parent corporation of
the Company, and Sparjax Corporation, RSI Corporation's now-dissolved
subsidiary, are among several defendants in a lawsuit filed on July 29, 1993 by
Holiday Inns, Inc. in the Circuit Court of the Fourth Judicial Circuit for Duval
County, Florida. In connection with the distribution of the Company's common
stock to the shareholders of RSI Corporation in 1989, the Company indemnified
RSI Corporation against certain types of potential liabilities and expenses,
including those arising in connection with the lawsuit by Holiday Inns, Inc.

         This suit seeks indemnification for payments made or to be made by
Holiday Inns, Inc., as the guarantor, to the lessor for obligations under a land
lease agreement allegedly in default. The lease agreement was commenced in 1967
and has a term of ninety-nine years. The lessor under the lease agreement was
originally Fernandina Contractors, Inc., and by assignment is currently Sam
Spevak. Holiday Inns, Inc. was the original lessee under the lease agreement.
Payments under the lease agreement are the greater of $24,000 annually (as
adjusted by the consumer price index) or the highest average annual payments
during any five-year period during the first twenty (20) years of the lease,
using a percentage of income formula. The Company has answered the equitable
subrogation claim of Holiday Inns, Inc., but has 

<PAGE>   9

moved to dismiss the remaining counts of the complaint filed by Holiday Inns,
Inc.

         The lessee's interest in the lease agreement has been assigned to a
series of parties including RSI Corporation and Sparjax Corporation. RSI
Corporation was the lessee under the lease agreement from June, 1979 to August,
1979, and Sparjax Corporation was the lessee thereunder from August, 1979 to
January, 1981. The current lessee is American Hotel Investors, Inc. ("AHI"). AHI
allegedly has failed to make lease payments due under the lease agreement and
otherwise to comply with its obligations under the lease agreement.

         Holiday Inns, Inc. has alleged that Sparjax Corporation, which is the
assignee of the lease agreement from RSI Corporation, is in breach of a written
Indemnification Agreement executed by Sparjax Corporation in favor of Holiday
Inns, Inc. upon its assumption of the lease agreement in 1979. RSI Corporation
acquired all of Sparjax Corporation's outstanding common stock during fiscal
1983, and Sparjax Corporation was dissolved by forfeiture during fiscal 1990. In
connection with such dissolution, no material assets were distributed from
Sparjax Corporation to RSI Corporation. Other than as described herein, there is
no contractual relationship whatsoever between RSI Corporation and Holiday Inns,
Inc.

         On or about September 23, 1992, Sam Spevak filed a lawsuit against
Holiday Inns, Inc. for allegedly failing to pay monthly rent under the lease
agreement. This lawsuit is pending in the Circuit Court of the Fourth Judicial
Circuit, in and for Duval County, Florida. On May 4, 1993, Sam Spevak filed a
Second Amended Complaint seeking from Holiday Inns, Inc. unpaid rent, unpaid
taxes, interest, attorney fees and costs. On November 19, 1993, Sam Spevak filed
a Third Amended Complaint in the Court. This complaint seeks from Holiday Inns,
Inc. unpaid rent, unpaid taxes, attorney's fees and costs, and seeking a
declaratory judgment against Holiday Inns, Inc. to establish whether or not
Holiday Inns, Inc. is liable for costs of repair and maintenance to the leased
premises. Holiday Inns, Inc. amended its complaint to assert similar claims
against all subsequent lessees (including RSI Corporation and Sparjax
Corporation) under the lease agreement, seeking indemnification against sums
paid or to be paid to Sam Spevak pursuant to his lawsuit.

         During the first quarter of fiscal 1996, the Company reported a
cross-claim filed by Mr. Donald Roberts against all assignees of W. M. R., Inc.,
including RSI Corporation and Sparjax Corporation. Mr. Roberts was an individual
guarantor of W. M. R., Inc.'s obligations under the land lease. Counsel for RSI
Corporation and Sparjax Corporation have moved to dismiss Mr. Roberts'
cross-claims and the court has granted these motions, without prejudice. Counsel
for Sparjax Corporation and RSI Corporation have informed the Company that the
cross-claims do not raise any new substantive issues, but merely seek
indemnification from all assignees in the event that Mr. Roberts is required to
pay Holiday Inns, Inc. on his individual guaranty.

         On December 16, 1996, Sam Spevak filed a Fifth Amended Complaint and
Demand for Jury Trial against Holiday Inns, Inc. Sam Spevak's counsel has
alleged in the Fifth Amended Complaint that effective January 1996, the monthly
minimum rent under the lease is $5,595.85.

         With respect to RSI Corporation's maximum exposure in this case,
Holiday Inns has asserted that RSI Corporation and all other lessees are
obligated to reimburse it $259,201 for rent it paid to the landlord as a result
of AHI's failure to pay under the lease. This amount, however, only represents
delinquent rent through October 13, 1993, because Holiday Inns contends that the
lessee's obligations under the lease terminated on that date as a result 

<PAGE>   10

of James "Duke" Williams evicting AHI on behalf of the landlord. Mr. Spevak
claims, however, that as of January, 1995, he is entitled to past monthly rent
and interest (from October 13, 1993 through December 20, 1994) of $82,289 plus
future monthly rent through the end of the lease term in 2068 of $1,834,565
(which sum represents the present value using a 6.5% discount rate). If Mr.
Spevak is successful in proving his claim, RSI Corporation's exposure includes
these latter amounts. In addition, should the court determine that Holiday Inns,
Inc. has an obligation to pay the cost of repairs and maintenance incurred to
date and throughout the balance of the lease term, the amount of such costs
could be substantial but cannot be quantified with any reasonable degree of
accuracy. The Company believes the existing motel property is in a state of
significant disrepair such that it is not commercially usable. The City of
Jacksonville has recently sent notice, presumably to all parties involved in
this lawsuit, threatening to condemn the property and demolish the entire
structure. If that occurs, and the Court determines that the lessees have an
obligation to maintain the property during the lease term, RSI Corporation's
exposure could also include the costs of demolition and the expense of
rebuilding the hotel. This liability, of course, cannot be accurately estimated
at this time but no doubt involves a very substantial amount.

         RSI Corporation denies any liability to Holiday Inns, Inc. and intends
to defend this matter vigorously. Upon a motion of counsel for RSI Corporation,
Holiday Inns, Inc.'s claims against RSI Corporation were dismissed without
prejudice, but Holiday Inns, Inc. has filed an Amended Complaint to reinstate
certain of its claims, and to add a claim for equitable subrogation against RSI
Corporation and Sparjax Corporation. Counsel for RSI Corporation and Sparjax
Corporation has answered the equitable subrogation claim, and has moved for
dismissal with prejudice with respect to the claims that have previously been
dismissed.

         The deposition of James "Duke" Williams, a critical witness in the
case, has now been taken. Mr. Williams was involved in a contract to assume the
lease from Holiday Inns, Inc., which contract was later canceled by Holiday
Inns, Inc. The parties are presently scheduling the depositions of other
important fact witnesses. These include Mr. Spevak and several of the other
officers of Holiday Inns, Inc. who were involved in the negotiations to cancel
the lease with Mr. Williams. The mediation conference held in January 1995 was
not successful. The trial court recently removed the case from the trial docket
upon being notified that a settlement between Sam Spevak, the owner of the
property, and Holiday Inns and WMI, Inc. (and its individual guarantors) has
been reached. Counsel for the Company has asked for and are awaiting receipt of
the settlement documents. Counsel for the Company has been advised that the
settlement amount is less than $2,000,000. A mediation of the case was held on
Tuesday, November 18, 1997, but no settlement was reached. Settlement
discussions are actively proceeding. The case has not been re-set for trial, and
no dispositive motions have been filed. There is no assurance that any
settlement will occur or that the Company will be able to resolve this matter in
a satisfactory manner.

         If found liable for any sum as a result of Holiday Inns, Inc.'s claims,
the Company believes RSI Corporation and Sparjax Corporation would have a claim
in equity against AHI, the current and allegedly defaulting lessee under the
lease agreement, and its principal shareholders, who in the aggregate guaranteed
AHI's obligations under the lease for up to $150,000. AHI is a private
corporation and the Company has no information regarding the financial ability
of AHI or its principal shareholders to perform AHI's obligations under the
lease or to reimburse any third party for any payments made under the lease as a
result of the lawsuit described above.

         The ultimate outcome of this matter is not known. No provision has been

<PAGE>   11

made in the accompanying financial statements for any liability, which may
result from this matter.

         Other Litigation

         On January 12, 1995, a Mr. Cesar A. Cuenca served a complaint against
the Company in the 11th Judicial Circuit Court, Dade County, Florida seeking
damages in excess of the minimal jurisdictional amount of the Court, exclusive
of costs and interest, and demanding costs of the action together with such
further relief as the Court shall deem fit. The Plaintiff alleges that he was
injured while operating a vehicle that was sold by the Company. The Complaint
also named the manufacturer of the vehicle. The manufacturer has agreed to
provide full and complete indemnification to the Company based on the facts
known to date. There have been no allegations of any active negligence on the
part of the Company other than that it sold what is alleged to have been a
defective product. Accordingly, unless additional allegations are made against
the Company, the Company expects to continue to receive full indemnity and
defense from the manufacturer. The Company believes, based on the arrangements
with the manufacturer of the vehicle and the Company's own insurance, that there
is no known exposure to the Company from this litigation.

Item 4. Submission of Matters to a Vote of Security Holders

         No matters were submitted to a vote of securities holders during the
fourth quarter of the Company's 1997 fiscal year.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

         The Company's Common Stock is thinly traded in the over-the-counter
market by NASDAQ. The high and low bid quotations of the Company's Common Stock
are set forth below for the fiscal quarters indicated, as reported by NASDAQ for
such periods. These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not necessarily represent actual
transactions.

<TABLE>
<CAPTION>
                                                 1997                  1996

              Fiscal                        High      Low        High       Low
<S>                                         <C>       <C>        <C>        <C>
              First Quarter                  .28      .06        .08        .08

              Second Quarter                 .90      .28        .08        .06

              Third Quarter                  .53      .38        .07        .06

              Fourth Quarter                 .50      .38        .07        .06
</TABLE>

         As of November 13, 1997, the Company had approximately 645 shareholders
of record.

         The Company paid no cash dividends with respect to its Common Stock
during fiscal 1997, 1996 and 1995, and does not intend to pay cash dividends in
the foreseeable future.


<PAGE>   12


Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

General

         Special Cautionary Notice Regarding Forward-Looking Statements.

         This Report on Form 10-KSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act and 21E of the Exchange Act.
Forward-looking statements are indicated by such terms as "expects", "plans",
"anticipates", and words to similar effect. Such forward-looking statements are
subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements. Important factors ("Cautionary
Statements") that could cause the actual results, performance or achievements of
the Company to differ materially from the Company's expectations are disclosed
in this Report on Form 10-KSB including, without limitation, those factors
discussed in the paragraph immediately preceding the heading "Liquidity and
Capital Resources" on pages 18 and 19 and otherwise herein. All written or oral
forward-looking statements attributable to the Company are expressly qualified
in their entirety by the Cautionary Statements.

         Change to Going Concern Basis

         Because the Company decided in 1994 that it should cease its existing
business operations and sell substantially all of its operating assets, the
Company reported its financial position on the liquidation basis of accounting
during the fiscal years ended August 31, 1994 through August 31, 1996. In the
liquidation basis of accounting, assets were valued at their net realizable
value (rather than at their net historical cost), and liabilities included
estimated costs associated with carrying out the sale of substantially all of
the assets of the Company.

         The Company substantially completed its plan to sell substantially all
of its operating assets ("Sale of Assets Plan") during fiscal 1996 and purchased
the common stock of a company engaged in the consumer finance business in
November 1996. Accordingly, on September 1, 1996, the Company adopted the going
concern basis of accounting. The carrying amount of the assets and liabilities
under the liquidation basis of accounting were adjusted to the historical cost
basis under the going concern basis of accounting. This adjustment included a
reduction of the carrying value of the Tampa, Florida real estate then held for
sale from its estimated liquidation value of $430,000 to its depreciated cost on
September 1, 1996 of $263,000, a decrease in net assets of $167,000. Prepaid
expenses were increased by $15,000. The estimated liquidation costs during the
remaining period of liquidation of $152,000 were not included in the balance
sheet.

         New Business Acquired

         On November 4, 1996, the Company purchased the outstanding common stock
of CambridgeBanc, Inc., a small specialized consumer finance business that
originates and sells consumer finance receivables, substantially all of which
are loans secured by liens on improved property. On March 18, 1997, the name of
CambridgeBanc, Inc. was changed to HomeAdd Financial Corporation ("HomeAdd").


<PAGE>   13


Results of Operations

         As stated above, the Company acquired a consumer loan business on
November 4, 1996. The following discussion of the results of operations during
the year ended August 31, 1997 relates to the consumer loan business during the
period beginning November 4, 1996 through August 31, 1997.

         Revenues were $270,000 during the fiscal year ended August 31, 1997 and
consisted of loan origination fees and gain from the sale of the loans made.

         General and administrative expenses of $978,000 include expenses
incurred by HomeAdd of $609,000 during the year ended August 31, 1997. The
corporate general and administrative expenses primarily consist of salaries,
legal, audit and other administrative expenses. The HomeAdd expenses primarily
relate to advertising, salaries, and various administrative expenses of HomeAdd.

         The results of operations for the fiscal year ended August 31, 1997
included the $300,000 cost to settle the lawsuit relating to environmental
litigation found on the property formerly owned by Wiegmann & Rose and sold to
Triple A in 1987. For further discussion of the settlement of the lawsuit,
reference is made to Part I, Item 3, "Legal Proceedings," which is incorporated
herein by reference.

         HomeAdd offers high loan-to-value loans ("HLTV Loans") to certain
qualified borrowers that permit the loan proceeds to be used for debt
consolidation and home improvements. Under the terms of these HLTV loans,
HomeAdd will make loans secured by a second or third mortgage in which the loans
can be up to 125% of the estimated fair value of the real property. A qualified
borrower is required to be a homeowner with acceptable levels of income and have
an acceptable credit history. Approximately 96% of loan volume during fiscal
1997 consisted of HLTV Loans. The Company expects that most of the loans made
during fiscal 1998 will be HLTV Loans.

         HomeAdd also offers Title I home improvement loans ("Title I Loans")
under the Title I program administrated by the Federal Housing Administration
("FHA"). HomeAdd was approved by FHA as a Title I lender during 1995. The Title
I program was established by Title I of the National Housing Act of 1934. Loans
made under the Title I program are 90% guaranteed by the United States
Department of Housing and Urban Development ("HUD"). In addition to the FHA
Title I license, HomeAdd has to apply for licenses to operate under the banking
laws of each State in which this business chooses to operate. HomeAdd is
currently authorized to operate under the laws of South Carolina and North
Carolina. HomeAdd is subject to ongoing monitoring by regulatory authorities and
the failure to comply with applicable regulations could result in the forfeiture
of licenses on which the business is dependent. Approximately 4% of loan volume
during fiscal 1997 were Title I home improvement loans. The Company does not
expect Title I home improvement loans to be a material portion of its business
during fiscal 1998.

         The Company sells substantially all of the loans it originates on a
non-recourse basis in the secondary market. The non-recourse basis means that
the Company represents that loans were properly documented and made in
accordance with applicable lending criteria, but that the purchaser of the loans
assumes the full credit risk. The Company's credit guidelines for the Company's
loans currently meet the underwriting criteria of the current loan purchasers.
During the fiscal year ended August 31, 1997, the Company made loans aggregating
$3,424,000 of which $150,000 in loans were made under the Title I Loan program
and $3,274,000 in loans were made under the HLTV Loan program. Substantially all
of the loans were sold on a non-recourse basis in the secondary market ($21,000
of these were sold during September of 1997).



<PAGE>   14

         As of August 31, 1997, HomeAdd had eleven employees. The initial office
in Greenville, South Carolina includes sales, underwriting and administrative
personnel. An additional sales office in Charlotte, North Carolina opened on
April 1, 1997, but the Company determined that it was more cost effective to
generate its loan activities through direct mail solicitations from its
Greenville, South Carolina office, accordingly, the Charlotte, North Carolina
office was closed during October of 1997. The Company currently has no plans to
open additional sales offices. The Company currently plans to attempt to
increase its volume of loans made by going into additional markets, first in
North Carolina and then possibly other Southeastern States. The Company faces
stiff competition in these markets. Additional personnel will be added when and
if the volume of loans increases to a level that requires the additional
personnel. If HomeAdd achieves its budgeted operating goals, the Company
estimates that 14 employees will be required by HomeAdd at August 31, 1998.
There is no assurance, however, that it's operating goals can be accomplished.

         The consumer finance market is highly competitive and fragmented.
HomeAdd competes with a number of finance companies that provide financing to
individuals who may not have sufficient equity in their homes to qualify for
traditional second mortgage financing. HomeAdd also competes with established
home improvement lenders, other Title I lenders (many of whom are now making
HLTV Loans), existing mortgage brokers and bankers that offer multi-purpose
second mortgages. To a lesser extent, HomeAdd competes with commercial banks,
savings and loan associations, credit unions, insurance companies, and captive
finance arms of major manufacturing companies that may apply more traditional
lending criteria and require greater equity in the underlying real property
assets. Almost all of these competitors or potential competitors are
substantially larger and have significantly greater capital, experience and
other resources than the Company.

         The Company expects that during the next twelve months the increase in
its business, if any, will be in HLTV Loans. Title I home improvement loans are
not expected to be a material factor in its business during the next twelve
months.

         Debt consolidation and home equity loan volume generally are not
materially impacted by seasonal climate changes and, with the exclusion of
slowdowns during the holiday and vacation seasons, tends to be relatively stable
throughout the year. Home improvement loan volume generally tracks the
seasonality of home improvement contract work. Volume tends to build during the
spring and early summer months. A decline is typically experienced in late
summer and early fall until temperatures begin to drop. This change in seasons
precipitates the need for new siding, window and insulation contracts. Peak
volume is generally experienced in November and early December and declines
dramatically from the holiday season through the winter months.

         HomeAdd attempts to sell, on a non-recourse basis, all of its loans on
the secondary market to wholesale buyers. HomeAdd does not have the capital that
would be necessary to make a significant volume of loans unless it is able
promptly to sell its loans on the secondary market. There can be no assurance
that the secondary market for loans will continue to be available to HomeAdd.
Adverse changes in the secondary market could materially impair HomeAdd's
ability to originate and sell loans on a favorable or timely basis. Delays in
the sale of a loan pool beyond a quarter-end could result in greater losses for
such quarter. If HomeAdd is unable to sell its loans on the secondary market,
its ability to grow could be materially impaired and its results of operations
and financial condition could be materially adversely affected. See Liquidity
and Capital Resources - Capital Requirements for HomeAdd.

<PAGE>   15

         A portion of the revenues projected in HomeAdd's business plan is
dependent on the continuation of the Title I Loan program, which is federally
funded. The Title I Loan program provides that qualifying loans are eligible for
FHA insurance. In September of 1997, a HUD official told a group of lenders that
the FHA Title I home improvement program will have to demonstrate that it is
needed and satisfies certain "core issues" in order to survive. In August of
1995, bills were introduced in both houses of the United States Congress that
would, among other things, abolish HUD, reduce federal spending for housing and
community development activities and eliminate the Title I Loan program. Other
changes to HUD have been proposed, which, if adopted, could materially and
adversely affect the operation of the Title I Loan program. Discontinuation of
or a significant reduction in the Title I Loan program or HomeAdd's authority to
originate loans under the Title I Loan program would have an adverse effect on
the ability of HomeAdd to carry out its business plan.

         The Company expects that HomeAdd will continue to operate at a loss
during, at a minimum, fiscal year 1998, but based on its business plan,
currently expects HomeAdd to operate at a modest profit by fiscal 1999. The
foregoing is a forward-looking statement and the Company cautions that there can
be no assurance that this goal can be achieved. An important factor which could
cause the Company's results to differ materially from the forward-looking
statement include lower origination volume due to real estate market conditions
that might affect the appraised values of the real property that would be used
as collateral for the loans that HomeAdd plans to originate. HomeAdd's business
might be reduced if values of the collateral increase and HomeAdd's customers
might then qualify for more traditional sources of credit such as banks. Another
important factor is the adverse consequences of changes in interest rate
environment such as increases in rates that might reduce the number of customers
that would be willing to execute loans at the higher rates. Other factors that
could cause the Company's results to differ materially from the forward-looking
statement included, but are not limited to, the following: inability of
borrowers to repay their loans and the increased risk of default in that this
would adversely affect the ability of the Company to sell its loans; the limited
operating history of lending operations in that HomeAdd has only had a Title I
lending license since November of 1995 and most of its personnel have been
employed by HomeAdd for less than one year; general economic conditions in the
Company's market, including inflation, recession, interest rates and other
economic factors that might affect the credit rating of its customers in which
case HomeAdd would no longer be able to make loans to these potential customers
with reduced credit ratings because HomeAdd would not be able to sell the loans
for an amount that would be profitable for HomeAdd; loss of funding sources,
particularly since the Company currently only has arrangements for a credit
facility with one bank; loss of ability to sell loans since the Company does not
have sufficient resources to finance holding a substantial number of loans to
their maturity; general lending risks that might result in HomeAdd making
uncollectible loans or loans that it would be unable to sell; dependence on
Federal programs particularly since the need to continue the Title I Loan
program is now under discussion by HUD officials; impact of competition,
particularly since almost all of HomeAdd's competitors or potential competitors
are substantially larger and have significantly greater capital, experience and
other resources than the Company, and many competitors and potential competitors
already have existing relationships with the Company's potential customers;
regulation of lending activities in that HomeAdd, in addition to the FHA Title I
license discussed below, operates under the banking laws of various States;
changes in the regulatory environment in that both the Federal government and
each State in which HomeAdd operates might make changes in the regulations under
which HomeAdd operates or in the interpretation of existing regulations at any
time and HomeAdd may not be able to comply with these regulations; and
dependence on key executives, particularly since HomeAdd and the Company have a
limited 

<PAGE>   16

number of personnel.

Liquidity and Capital Resources

         Anticipated Liquidity Requirements

         As discussed below under "Cash and Cash Equivalents" and "Debt
Arrangements," the Company currently has substantial cash liquidity and,
although there can be no assurance in this regard, anticipates that such capital
resources will be sufficient to enable the Company to meet its liquidity
requirements during the next twelve months.

          In addition to its ordinary expenses, the Company will continue to
incur legal expenses relating to its contingent liabilities. The Company plans
to continue to attempt to settle its contingent liabilities, but it cannot
estimate when these will be settled or the ultimate outcome of the lawsuits or
matters described above under Item 3 of Part I, "Legal Proceedings" or of any
unknown contingencies. There can be no assurance that the Company's cash
balances will be sufficient to allow it to fund its operations and meet its
recorded liabilities and any known or unknown contingent liabilities. The
ultimate outcome of these contingencies is not known. No provision has been made
in the accompanying financial statements for any liability that may result from
these matters.

         Fiscal Year 1997 Activities

         The Company executed a contract to sell its office and warehouse
facility in Tampa, Florida for $425,000, less certain selling expenses, during
August of 1997. The sale was consummated on November 19, 1997. Under the terms
of the agreement, the Company agreed to finance $75,000 of this sales price over
ten years and will hold a second mortgage on the Tampa property bearing interest
at 8.5% interest. The Company can offer no assurance as to the creditworthiness
of the purchaser of the building. Proceeds from the sale of the Tampa facility
were applied first to the payment of expenses related to the sale, and remaining
proceeds were used to provide operating capital for HomeAdd.

         Cash and Cash Equivalents

         Cash and cash equivalents in the amount of $759,000 as of August 31,
1997 included United States treasury bills with a maturity of three months when
purchased and having a cost basis of $670,000. Cash in excess of the amounts
invested in United States treasury bills is invested as available in a money
market fund, which may be liquidated by the Company to meet its cash needs on a
daily basis. The Company earned $94,000 on its investments during the year ended
August 31, 1997.

                  U. S. Treasury Bill

         The Company is required as described in the following paragraph to
maintain an investment in HomeAdd of $500,000. At August 31, 1997, the assets of
the Company included a U. S. Treasury bill with a fair market value of $508,000
that matures on November 28, 1997 for $515,000.


         Debt Arrangements

         During December of 1996, HomeAdd executed a warehouse line of credit
with a bank in the amount of $500,000 that is used to finance loans made to
third parties in connection with its consumer finance business. The loans made
by HomeAdd are collateral for this line of credit. This line of credit 

<PAGE>   17

bears interest at the bank's prime rate plus one percent. During August of 1997,
HomeAdd executed an amendment to the line of credit agreement in which, among
other things, the bank extended the time for repayment of an advance from
fifteen days to twenty-five days. Under the terms of the loan agreement and an
agreement that the Company has executed with HomeAdd, HomeAdd is required to
maintain tangible net worth of at least $500,000. See the next paragraph for the
amount of net worth required by HUD. The bank also requires that this tangible
net worth include certain specified assets with maturity of five years or less
in the amount of $500,000. This line expires on April 30, 1998.

         Capital Requirements for HomeAdd

         During the year ended August 31, 1997, the Company invested $924,000 in
HomeAdd. The investment was used as follows: acquisition of common stock -
$15,000, equipment rental for first year - $18,000, purchase of U. S. Treasury
bill - $500,000, purchase of money market account - $25,000 and operating
capital of $366,000. HUD requires that HomeAdd have an adjusted net worth of at
least $250,000. Given its cash and cash equivalents position, the Company
believes that it has the capacity to provide the additional capital that will be
required by HomeAdd during fiscal 1998. The Company presently anticipates that
it will need additional external sources of capital at least by fiscal year 1999
and presently intends to explore an increase in a bank line of credit.

         Year 2000

         The Company has assessed key financial, informational and operational
systems. Management does not anticipate that the Company will encounter
significant operational issues relating to Year 2000. Furthermore, the financial
impact of making required systems changes is not expected to be material to the
Company's consolidated financial position, results of operations or cash flows.

Item 7.  Financial Statements

          The response to this Item is set forth on page F-2 and submitted as a
separate section of this report.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

                 None


<PAGE>   18



PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons; 
         Compliance with Section 16(a) of the Exchange Act

Item 10. Executive Compensation

Item 11. Security Ownership of Certain Beneficial Owners and Management

Item 12. Certain Relationships and Related Transactions

         Information required under Items 9, 10, 11 and 12 of Part III is
incorporated herein by reference to the portions of the definitive Proxy
Statement to be filed with the Securities and Exchange Commission on or prior to
120 days following the end of the Company's fiscal year.

Item 13. Exhibits, and Reports on Form 8-K

(a)      Listing of Exhibits

3.1      Articles of Incorporation of RSI Holdings, Inc., as amended:
         Incorporated by reference to Exhibit 3.2 and 3.2.2 to the Registration
         Statement on Form S-4 of RSI Corporation and Porter Brothers, Inc.,
         File No. 33-30247 (the "Form S-4").

3.1.1    Articles of Amendment and Certificate of Reduction of Capital of Porter
         Brothers, Inc.: Incorporated by reference to Exhibit 4.1 to the Form
         8-K of the Registrant filed with the Securities and Exchange Commission
         on November 28, 1989, File No. 0-7067.

3.2.1    By-laws of RSI Holdings, Inc., as amended: Incorporated by reference to
         Exhibit 3.1.1 to the Form S-4.

3.2.2    Amendments to By-laws: Incorporated by reference to Exhibit 3.2.2 to
         the Form 10-KSB of the Registrant filed with the Securities and 
         Exchange Commission for the fiscal year ended August 31, 1996, 
         File No. 0-18091.

4.1      See Exhibits 3.1, 3.1.1, 3.2.1 and 3.2.2.

4.1.1    Specimen of Certificate for RSI Holdings, Inc., common stock:
         Incorporated by reference to Exhibit 4.1.2 to the Form S-4.

*10.1    RSI Holdings, Inc., Stock Option Plan, including an amendment:
         Incorporated by reference to Exhibit 10.9 to the Form 10-K of the
         Registrant filed with the Securities and Exchange Commission for the
         fiscal year ended August 31, 1990, File No. 0-18091 (the "1990 Form
         10-K").

*10.1.1  Amendment to Stock Option Plan: Incorporated by reference to Exhibit
         10.9.1 to the Form 10-K of the Registrant filed with the Securities and
         Exchange Commission for the fiscal year ended August 31, 1992, as
         amended, File No. 0-18091 (the "1992 Form 10-K").

*10.1.2  Proposed Amendment to Stock Option Plan

10.2     Agreement by and between the Company and Treadco, Inc. dated as of
         February 6, 1996: Incorporated by reference to Exhibit 10.1 to the Form
         10-QSB of the Registrant filed with the Securities and Exchange
         Commission for the quarter ended February 29, 1996, File No. 0-18091.

10.3     Letter Agreement by and between the Registrant and Tresca Industries
         dated September 8, 1994: Incorporated by reference to Exhibit 10.18 

<PAGE>   19

         to the 1994 Form 10-K of the Registrant filed with the Securities and
         Exchange Commission for the fiscal year ended August 31, 1994, File No.
         0-18091.

*10.4    RSI Holdings, Inc. Incentive Stock Award Plan, including an amendment:
         Incorporated by reference to Exhibit 10.8 to the 1990 Form 10-K.

*10.5    Amendment to Incentive Stock Award Plan: Incorporated by reference to
         Exhibit 10.8.1 to the 1992 Form 10-K.

10.6     Loan Agreement dated December 12, 1996 by and among the Company,
         CambridgeBanc, Inc. and First Union National Bank, together with
         related documents: Incorporated by reference to the Form 10-QSB of the
         Registrant filed with the Securities and Exchange Commission for the
         fiscal quarter ended November 30, 1996, File No. 0-18091.

10.7     First Amendment to Loan Agreement dated as of August 25, 1997 by and
         among the Company, HomeAdd Financial Corporation, and First Union
         National Bank.

*10.8    Stock Option Agreement by and between the Registrant and C. C. Guy
         dated as of July 2, 1997.

*10.9    Stock Option Agreement by and between the Registrant and Charles M.
         Bolt dated as of July 2, 1997.

10.10    Lease Agreement by and between Hewitt Coleman Companies, Inc., Lessor
         and HomeAdd Financial Corporation, Lessee dated August 4, 1997.

10.11    Agreement by and between the Company and Fuller D. Tresca dated
         November 19, 1997.

21.      Subsidiaries of the Registrant.

23.      Consent of Ernst & Young LLP, Independent Auditors.

27.      Financial Data Schedule (For SEC use only)

99.      Consent Decree and Judgment dated December 31, 1991 entered by the
         United States District Court for the Northern District of California in
         Wiegmann & Rose International Corp., a South Carolina corporation
         ("Wiegmann & Rose"), plaintiff, v. NL Industries, Inc., a New Jersey
         corporation, and Esselte Pendaflex Corporation, a New York corporation,
         defendants; NL Industries, Inc., a New Jersey corporation, and Esselte
         Pendaflex Corporation, a New York corporation, third party plaintiffs,
         v. Triple A Machine Shop, Inc., a California corporation ("Triple A"),
         third party defendant, C.A. No. C-88-4817 FMS: Incorporated by
         reference to Exhibit 28.1 to the Registrant's Form 8-K, filed with the
         Securities and Exchange Commission on January 3, 1992, File No.
         0-18091.

99.1     Settlement Agreement and Release by and between Wiegmann & Rose, Delta
         Woodside Industries, Inc., formerly known as RSI Corporation, a South
         Carolina corporation and Triple A: Incorporated by reference to Exhibit
         99.1 to the Registrant's Form 8-K, filed with the Securities and
         Exchange Commission on November 18, 1996, File No. 0-18091.

* Management contract or compensatory plan required to be filed as an exhibit
  pursuant to Item 13 of Form 10-KSB.

<PAGE>   20

         (b)      Reports on Form 8-K:

                  There were no reports on Form 8-K filed during the fourth
quarter of the fiscal year ended August 31, 1997.



<PAGE>   21



                                   SIGNATURES




In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

RSI HOLDINGS, INC.                          TITLE


/s/ Buck Mickel       November 25, 1997     Chairman of the Board of Directors
Buck Mickel                (Date)           and Chief Executive Officer
                                            (Principal Executive Officer)


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.



/s/ Buck Mickel       November 25, 1997     Director, Chairman of the     
Buck Mickel                (Date)           Board and Chief Executive Officer
                                            (Principal Executive Officer)



/s/ C. C. Guy         November 25, 1997     Director
C. C. Guy                  (Date)



/s/ Charles M. Bolt   November 25, 1997     Director
Charles M. Bolt            (Date)



/s/ Buck A. Mickel    November 25, 1997     Director
Buck A. Mickel             (Date)


/s/ Joe F. Ogburn     November 25, 1997     Vice President and Treasurer
Joe F. Ogburn              (Date)           (Principal Financial and
                                            Accounting Officer)



<PAGE>   22





                          Annual Report on Form 10-KSB

                   Item 7, Item 14(a)(1) and (2), (c) and (d)

                          List of Financial Statements

                              Financial Statements

                           Year Ended August 31, 1997

                               RSI Holdings, Inc.

                           Greenville, South Carolina



<PAGE>   23


                               RSI Holdings, Inc.

                        Form 10-KSB-Item 14(a)(1) and (2)

                          Index of Financial Statements





The following consolidated financial statements of RSI Holdings, Inc. are
included in Item 7:

         Consolidated balance sheet - August 31, 1997

         Consolidated statement of operations - Year ended August 31, 1997

         Consolidated statement of shareholders' equity - Year ended August 31,
         1997

         Consolidated statement of cash flows - Year ended August 31, 1997

         Consolidated statement of changes in net assets in liquidation - Year
         ended August 31, 1997

         Notes to consolidated financial statements - August 31, 1997




<PAGE>   24



                Report of Ernst & Young LLP, Independent Auditors



The Board of Directors and Shareholders
RSI Holdings, Inc.

We have audited the accompanying consolidated balance sheet of RSI Holdings,
Inc. as of August 31, 1997 and the related consolidated statements of
operations, shareholders' equity and cash flows for the year then ended. We have
also audited the consolidated statement of changes in net assets in liquidation
for the year ended August 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As more fully described in Note 1, the Company has changed its basis of
accounting effective September 1, 1996 from the liquidation basis to the going
concern basis.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of RSI
Holdings, Inc, at August 31, 1997, and the consolidated results of its
operations and its cash flows for the year then ended and the changes in
consolidated net assets in liquidation for the year ended August 31, 1996, in
conformity with generally accepted accounting principles.



                                                        /s/ ERNST AND YOUNG LLP


October 15, 1997



<PAGE>   25


                               RSI Holdings, Inc.

                           Consolidated Balance Sheet

                                 August 31, 1997



ASSETS
Current assets:
   Cash and cash equivalents                                        $  759,000
   Notes and accounts receivable, net of allowance for
     doubtful accounts of $28,000                                       34,000
   Prepaid expenses                                                     63,000
                                                                    ----------
Total current assets                                                   856,000

Property and equipment:
   Cost                                                                 55,000
   Less accumulated depreciation                                        25,000
                                                                    ----------
                                                                        30,000

Other assets:
   U.S. Treasury bill (Note 5)                                         508,000
   Land and building held for sale, net of accumulated
     depreciation of $301,000 (Note 3)                                 248,000
   Other                                                                15,000
                                                                    ----------
                                                                       771,000
                                                                    ----------
                                                                    $1,657,000
                                                                    ==========


<PAGE>   26










LIABILITIES AND SHAREHOLDERS' EQUITY 
Current liabilities:
     Trade accounts payable                                        $    30,000
     Accrued expenses (Note 4)                                         132,000
     Note payable (Note 5)                                              19,000
                                                                   -----------
                                                                       181,000

Deferred compensation                                                  116,000

Shareholders' equity:
   Common Stock, $.01 par value - authorized 25,000,000 shares,
     issued and outstanding 7,999,292 shares at August 31, 1997         80,000
   Excess of paid-in capital over par value                          3,799,000
   Deficit                                                          (2,495,000)
                                                                   -----------
                                                                     1,384,000
   Less cost of 98,470 shares of Common Stock in treasury              (24,000)
                                                                   -----------
                                                                     1,360,000

Contingencies (Note 10)
                                                                   -----------
                                                                   $ 1,657,000
                                                                   ===========



See accompanying notes.



<PAGE>   27


                               RSI Holdings, Inc.

                      Consolidated Statement of Operations

                           Year Ended August 31, 1997



Revenues:
   Origination fees                                          $   199,000
   Gain on sale of loans                                          71,000
                                                             -----------
Total revenue                                                    270,000

Expenses:
   Selling, general and administrative                           978,000
                                                             -----------
Loss from operations                                            (708,000)

Other income (expense)
   Interest income                                                94,000
   Rental income on asset held for sale                           29,000
   Interest expense                                              (16,000)
   Cost to settle lawsuit                                       (300,000)
                                                             -----------
Total other income (expense)                                    (193,000)
                                                             -----------
Net loss                                                     $  (901,000)
                                                             ===========

Net loss per share                                           $      (.11)
                                                             ===========

Weighted average number of shares outstanding                  7,916,205
                                                             ===========



See accompanying notes.



<PAGE>   28


                               RSI Holdings, Inc.

                 Consolidated Statement of Shareholders' Equity

                           Year Ended August 31, 1997




<TABLE>
<CAPTION>
                                                         Excess Of
                                                          Paid-in
                                    Common Stock          Capital                        Treasury Stock
                                --------------------       Over                       --------------------
                                  Shares      Amount     Par Value    (Deficit)       Shares       Amount        Total
                                ---------    -------    ----------   -----------      ------     ---------    ----------

<S>                             <C>          <C>        <C>          <C>              <C>        <C>          <C>       
Balance at September 1, 1996    7,994,292    $80,000    $3,799,000   $(1,594,000)       --       $   --       $2,285,000
Purchase of common stock             --         --            --            --        98,470      (24,000)       (24,000)
Shares of common stock 
   issued under provisions 
   of stock option plan             5,000       --            --            --          --           --             --
Net (loss) for year ended 
   August 31, 1997                   --         --            --        (901,000)       --           --         (901,000)
                                ---------    -------    ----------   -----------      ------     --------     ----------

Balance at August 31, 1997      7,999,292    $80,000    $3,799,000   $(2,495,000)     98,470     $(24,000)    $1,360,000
                                =========    =======    ==========   ===========      ======     ========     ==========

</TABLE>


See accompanying notes.



<PAGE>   29


                               RSI Holdings, Inc.

                      Consolidated Statement of Cash Flows

                           Year Ended August 31, 1997



OPERATING ACTIVITIES
Net (loss)                                                   $   (901,000)
Adjustments to reconcile net (loss) to net cash
   provided by operating activities:
     Depreciation and amortization                                 20,000 
     Changes in operating assets and
     liabilities:
       Accounts receivable                                          3,000
       Notes receivable                                           (21,000)
       Prepaid expenses and other                                 (47,000)
       Accounts payable and accrued expenses                       65,000
                                                             ------------
Net cash used in operating activities                            (881,000)

INVESTING ACTIVITIES
Purchase of U.S. Treasury bill                                   (508,000)
Acquisition of outstanding stock of HomeAdd
   Financial Corporation (Note 2)                                 (15,000)
Purchase of common stock                                          (24,000)
Organization expense                                              (13,000)
Purchase of equipment                                             (18,000)
Other                                                              (5,000)
                                                             ------------
Net cash used in investing activities                            (583,000)

FINANCING ACTIVITIES
Advances under bank lines of credit                             3,182,000
Payments on bank line of credit                                (3,163,000)
Payment of deferred compensation                                  (52,000)
                                                             ------------
Net cash used in financing activities                             (33,000)
                                                             ------------
Decrease in cash and cash equivalents                          (1,497,000)
Cash and cash equivalents at beginning of year                  2,256,000
                                                             ------------
Cash and cash equivalents at end of year                     $    759,000
                                                             ============



See accompanying notes.


<PAGE>   30


                               RSI Holdings, Inc.

                 Consolidated Statement of Changes in Net Assets
                                 in Liquidation

                           Year Ended August 31, 1996




Net assets in liquidation at beginning of year                 $ 2,143,000

Changes in net assets in liquidation attributed to:
   Cash and cash equivalents                                       784,000
   Trade accounts payable                                            2,000
   Accrued expenses                                                110,000
   Estimated costs during remaining period of liquidation          389,000
   Accounts receivable as a result of collections                  (11,000)
   Sales of property and equipment                              (1,119,000)
   Change in net realizable value of real property                 (10,000)
   Other assets                                                     (3,000)
                                                               -----------
Increase in net assets in liquidation                              142,000
                                                               -----------
Net assets in liquidation at end of year (Note 1)              $ 2,285,000
                                                               ===========



See accompanying notes.



<PAGE>   31


                               RSI Holdings, Inc.

                   Notes to Consolidated Financial Statements

                                 August 31, 1997



1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

RSI Holdings, Inc., (the "Company") ceased all of its former business operations
during August of 1994 and by the end of fiscal 1996, the Company had sold
substantially all of the operating assets of its former business. Concurrent
with the decision in 1994 to cease all of its former business operations, the
Company had adopted the liquidation basis of accounting. Generally accepted
accounting principles for the liquidation basis of accounting required that
assets be valued at their estimated net realizable value and liabilities be
presented at their estimated settlement amounts and also include estimated costs
associated with carrying out the liquidation. The Company's financial statements
were prepared under the liquidation basis of accounting through August 31, 1996.

During November of 1996 the Company decided not to liquidate and acquired the
outstanding common stock of a consumer finance company. Accordingly, effective
September 1, 1996 the Company adopted the going concern basis of accounting.

CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its subsidiaries (all of which are wholly-owned). Significant intercompany
balances and transactions have been eliminated.

DESCRIPTION OF BUSINESS

The Company and its principal operating subsidiary are primarily engaged in the
business of originating and selling second residential mortgage loans. The funds
for these loans are obtained principally through the utilization of a bank line
of credit.

Substantially all of the Company's loans are non-conforming in that the loans
may exceed the market value of the underlying mortgaged assets. It is the
Company's policy to sell these loans to selected third party wholesalers on a
non-recourse basis.



<PAGE>   32


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH EQUIVALENTS

The Company considers all highly liquid investments (United States treasury
bills) with a maturity of three months or less when purchased to be cash
equivalents.

PROPERTY AND EQUIPMENT

Property and equipment consists of office furniture and equipment and is stated
at cost. Depreciation is computed principally by the straight-line method over
the estimated useful lives of the assets. Estimated lives are 5 to 7 years for
furniture and office equipment.

LAND AND BUILDING HELD FOR SALE

Land and building held for sale is stated at the lower of cost or estimated fair
value.

REVENUE RECOGNITION

Origination fees charged on loans made is recognized as income when the loan
proceeds are disbursed. Gain on sale of loans is recorded when the loans are
sold. Mortgage loans are sold servicing released and on a non-recourse basis,
with customary representations and warranties. In connection with the sale of
mortgage loans, the Company receives cash premiums.

ADVERTISING COSTS

Advertising expense is primarily the costs of direct mail solicitation for home
improvement loans and debt consolidation loans and is recorded as expense in the
period in which the solicitations are mailed. The Company incurred advertising
expense of $181,000 during fiscal year 1997.

USE OF ESTIMATES

The preparation of the financial statements of the company in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts. These estimates are based on
information available as of the date of the financial statements. Therefore,
actual results could differ from those estimates.



<PAGE>   33


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the balance sheet for cash and cash
equivalents, notes and accounts receivable, treasury bills, accounts payable and
notes payable approximate their fair values.

STOCK OPTIONS

The Company accounts for and will continue to account for stock options under
Accounting Principles Board Opinion 25, "Accounting for Stock Issued to
Employees." Applying Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock-Based Compensation", which was adopted during the year
would not materially affect net loss and loss per share for fiscal 1997 (see
Note 7).


2. ACQUISITION

On November 4, 1996, the Company purchased for cash all of the outstanding
common stock of CambridgeBanc, Inc. from Emergent Group, Inc. (a company related
through a common board member, an officer and certain shareholders) for the
total purchase price of $15,000. The purchase method of accounting was used to
account for the acquisition. The assets that were owned by CambridgeBanc, Inc.
consisted of furniture and equipment that the Company believes had a fair value
of $15,000. In addition to the purchase agreement to acquire the common stock,
the Company executed a lease agreement with Emergent Group, Inc. in which the
Company paid $18,000 for the use of additional furniture and equipment for one
year. These assets were used by CambridgeBanc, Inc. in its previous operations.
CambridgeBanc, Inc. executed a sublease agreement to rent for one year from
Emergent Group, Inc. the office space that it occupied at $1,757 per month at
the time of the purchase.

In March 1997, CambridgeBanc, Inc. changed its name to HomeAdd Financial
Corporation ("HomeAdd"). Through HomeAdd, the Company now is engaging in the
business of originating and selling home improvement and other loans secured by
liens on improved property.



<PAGE>   34


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





3. LAND AND BUILDING HELD FOR SALE

Land and building held for sale are classified as follows:

      Land                                                   $200,000
      Building and improvements                               349,000
                                                             --------
                                                              549,000
      Less accumulated depreciation                           301,000
                                                             --------
                                                             $248,000
                                                             ========


4. ACCRUED EXPENSES

Accrued expenses at August 31, 1997 are as follows:

      Deferred compensation                                  $168,000
      Other                                                    80,000
                                                             --------
                                                              248,000
      Less current portion                                    132,000
                                                             --------
                                                             $116,000
                                                             ========


5. NOTE PAYABLE

During December of 1996, HomeAdd executed a warehouse line of credit with a bank
in the amount of $500,000 that is used to finance loans made to third parties in
connection with its consumer finance business. Borrowings under the line of
credit were $19,000 at August 31, 1997. The loans made by HomeAdd are collateral
for this line of credit. This line of credit bears interest at the bank's prime
rate plus one percent. Under the terms of the loan agreement, HomeAdd is
required to maintain tangible net worth of at least $500,000. The bank also
requires that this tangible net worth include certain specified assets with
maturity of five years or less in the amount of $500,000.

The Company incurred and paid interest cost of $16,000 during 1997.
Approximately $3,000 of the total interest incurred and paid relates to the
above arrangements with a bank and approximately $13,000 related to a deferred
compensation arrangement.



<PAGE>   35


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





6. LEASES

On November 4, 1997, the Company's newly acquired subsidiary, executed a
sublease agreement to rent for one year from Emergent Group, Inc. the office
space that it occupied at $1,757 per month at the time of the purchase. In
connection with the acquisition of the subsidiary, the Company also executed a
lease agreement with Emergent Group, Inc. pursuant to which the Company paid
$18,000 for the use of additional furniture and equipment for one year. These
assets were used by the subsidiary in its previous operations.

The Company leases its principal executive offices under a month-to-month lease
arrangement. Under the lease arrangement, the monthly rent was $885 and $354,
respectively, during the years ended August 31, 1997 and August 31, 1996. The
office space is leased from a corporation whose directors and officers include a
Vice President and former director and wife of the Chairman of the Board of the
Company and its shareholders all own more than 5% of the outstanding stock of
the Company. Subsequent to year-end, the Company moved its executive offices and
entered into a month-to-month lease arrangement in the amount of $2,250 per
month. This office space is leased from a corporation which is owned by three
shareholders.

The Company leases office facilities in Shelby, North Carolina at $350 per month
under an arrangement that expires December 31, 1997.

The Company's operating subsidiary leases office space in Greenville, South
Carolina at approximately $4,200 per month under an arrangement that expires
September 1, 2002.

Additionally, the Company leases an automobile under a noncancelable operating
lease that expires in November of 1997. The lease requires the Company to pay
taxes, insurance, maintenance and repairs.

Total rental paid relating to operating leases for fiscal years 1997 and 1996
(net of sub-lease rental income of $23,000 during 1996) was $54,000 and $21,000,
respectively.




<PAGE>   36


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





6. LEASES (CONTINUED)

The Company's obligations for minimum rentals under non-cancelable leases are as
follows:

       Year Ending August 31
       ---------------------

               1998                                        $57,000
               1999                                         50,000
               2000                                         50,000
               2001                                         50,000
               2002                                         50,000


7. SHAREHOLDERS' EQUITY

On November 15, 1991, the Company adopted a Stock Option Plan that authorizes
the Board of Directors to grant option of up to 250,000 shares of the Company's
Common Stock. As of August 31, 1997, 172,500 shares have been awarded to plan
participants.

All options under the Stock Option Plan were granted at not less than fair
market value at dates of grant.




<PAGE>   37


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





7. SHAREHOLDERS' EQUITY (CONTINUED)


<TABLE>
<CAPTION>
                                                                     Number             Average
                      Stock Options                                Of Shares          Option Price
      ----------------------------------------------               ---------        ---------------
<S>                                                                <C>              <C>   
      FISCAL YEAR 1996 ACTIVITY
      Options outstanding at September 1, 1995                       90,000             $0.125
      No shares were  granted or  exercised  during
        fiscal year 1996                                                  -                  -
                                                                    -------             ------
      Options outstanding at August 31, 1996
                                                                     90,000              0.125

      FISCAL YEAR 1997 ACTIVITY
      Options granted                                               102,500              0.375
      Options exercised                                               5,000              0.125
                                                                    -------             ------
      Options outstanding at August 31, 1997                        187,500        $0.125 - $0.375
                                                                    =======        ===============

</TABLE>

The outstanding options at August 31, 1997 expire on June 4, 2002 and July 2,
2007 and had a weighted average remaining contractual life of approximately 7
years. There were 167,500 options currently exercisable with option prices
ranging from $.125 to $.375 with a weighted average exercise price of $.235.

The Company also has an Incentive Award Plan that was adopted on November 15,
1991 that authorizes the Board of Directors to grant up to 250,000 shares to key
management employees. At August 31, 1997 and during the two years ended August
31, 1997, there were no shares outstanding under the Incentive Award Plan.

As disclosed in Note 1, the Company adopted the disclosure only provisions of
FAS 123. By adopting FAS 123, the Company's net loss available to common
shareholder and net loss per share would not have been materially different from
those amounts reported in the consolidated statement of operations; therefore,
supplemental proforma information has not been disclosed as permitted by FAS
123.


<PAGE>   38


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





8. INCOME TAXES

During fiscal 1997, net deferred tax benefits were not recorded relating to
temporary differences since the Company is not assured that the resulting
additional deferred tax assets will be realized. Significant components of the
Company's deferred tax assets and liabilities are as follows:

      ASSETS
      Net operating loss carryforward                            $3,638,000
      Insurance accruals                                             71,000
      Allowance for doubtful accounts                                10,000
      Other                                                          41,000
                                                                 ----------
                                                                  3,760,000
      Valuation allowance                                         3,755,000
                                                                 ----------
      Deferred tax assets                                             5,000

      LIABILITIES
      Depreciation                                                    5,000
                                                                 ----------
      Net deferred taxes                                         $        -
                                                                 ==========


At August 31, 1997, the Company has net operating loss carryforwards available
for income tax purposes of approximately $9,900,000. Such carryforwards expire
in 2006 through 2012. The Company's ability to use its existing net operating
loss carryforward may be jeopardized or lost if the Company undergoes an
"ownership change" as defined by the Internal Revenue code.

The valuation allowance increased $208,000, net during 1997.

9. AFFILIATED PARTY TRANSACTIONS

The secretary of the Company is a member of a law firm which represents the
Company. Legal fees for services rendered by this firm to the Company amounted
to approximately $18,000 and $35,000 for the 1997 and 1996 fiscal years,
respectively.

See Note 6 concerning leases with affiliated parties.



<PAGE>   39


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





10. CONTINGENCIES

On November 18, 1996, Wiegmann & Rose International Corp. ("Wiegmann & Rose"), a
wholly-owned subsidiary of the Company, entered into an agreement to settle a
lawsuit brought by Triple A Machine Shop, Inc. ("Triple A") relating to
environmental contamination on property formerly owned by Wiegmann & Rose and
sold to Triple A in 1987. Pursuant to the settlement agreement Wiegmann & Rose
paid to Triple A the sum of three hundred thousand ($300,000) dollars in
exchange for settlement of the lawsuit as well as Triple A's release of Wiegmann
& Rose and the Company from any further liability to Triple A in connection with
the property or under the agreement made at the time of sale of the property.

Wiegmann & Rose has also been sued, along with several other defendants, in
seven personal injury asbestos suits. Although, Wiegmann & Rose has been
dismissed without prejudice in each of the seven suits, Wiegmann & Rose could be
brought back into the litigation in five of these seven dismissed cases. No
provisions have been made in the accompanying financial statements for any
liability which may result from this matter.

In addition, the Company is one of several defendants in a lawsuit filed in July
1993 claiming indemnification with respect to payments due and the cost of
performing certain covenants and obligations under a land lease agreement
allegedly in default. This agreement relates to a motel property previously
operated by the Company. The Company intends to defend this matter vigorously.
The ultimate outcome of this matter is not known. No provision has been made in
the accompanying financial statements for any liability which may result from
this matter.

In addition, during January 1995, a complaint against the Company seeking
damages in excess of the minimal jurisdictional amount was served. The Plaintiff
alleges that he was injured while operating a vehicle that was sold by the
Company. The Complaint also named the manufacturer of the vehicle. The
manufacturer has accepted defense of the Company regarding this matter under
reservation of rights. The Company believes, however, based on the arrangements
with the manufacturer and the Company's own insurance, that this action should
not have a material adverse effect on the Company's financial position.



<PAGE>   40


                               RSI Holdings, Inc.

             Notes to Consolidated Financial Statements (continued)





10. CONTINGENCIES (CONTINUED)

In February 1994, an individual served a complaint against the Company seeking
damages in excess of $15,000 for injuries sustained while operating a turf care
product sold by the Company. The complaint also included the manufacturer of the
product. The manufacturer and its insurance carrier accepted defense of the
Company regarding this matter. The case was settled in February 1997 and this
case is now resolved in its entirety. The Company did not incur any liability in
the settlement of this matter.


<PAGE>   41


                                INDEX OF EXHIBITS

3.1      Articles of Incorporation of RSI Holdings, Inc., as amended:
         Incorporated by reference to Exhibit 3.2 and 3.2.2 to the Registration
         Statement on Form S-4 of RSI Corporation and Porter Brothers, Inc.,
         File No. 33-30247 (the "Form S-4").

3.1.1    Articles of Amendment and Certificate of Reduction of Capital of Porter
         Brothers, Inc.: Incorporated by reference to Exhibit 4.1 to the Form
         8-K of the Registrant filed with the Securities and Exchange Commission
         on November 28, 1989, File No. 0-7067.

3.2.1    By-laws of RSI Holdings, Inc., as amended: Incorporated by reference to
         Exhibit 3.1.1 to the Form S-4.

3.2.2    Amendments to By-laws.

4.1      See Exhibits 3.1, 3.1.1, 3.2.1 and 3.2.2.

4.1.1    Specimen of Certificate for RSI Holdings, Inc., common stock:
         Incorporated by reference to Exhibit 4.1.2 to the Form S-4.

*10.1    RSI Holdings, Inc., Stock Option Plan, including an amendment:
         Incorporated by reference to Exhibit 10.9 to the Form 10-K of the
         Registrant filed with the Securities and Exchange Commission for the
         fiscal year ended August 31, 1990, File No. 0-18091 (the "1990 Form
         10-K").

*10.1.1  Amendment to Stock Option Plan: Incorporated by reference to Exhibit
         10.9.1 to the Form 10-K of the Registrant filed with the Securities and
         Exchange Commission for the fiscal year ended August 31, 1992, as
         amended, File No. 0-18091 (the "1992 Form 10-K").

*10.1.2  Proposed Amendment to Stock Option Plan.

10.2     Agreement by and between the Company and Treadco, Inc. dated as of
         February 6, 1996: Incorporated by reference to Exhibit 10.1 to the Form
         10-QSB of the Registrant filed with the Securities and Exchange
         Commission for the quarter ended February 29, 1996, File No. 0-18091.

10.3     Letter Agreement by and between the Registrant and Tresca Industries
         dated September 8, 1994: Incorporated by reference to Exhibit 10.18 to
         the 1994 Form 10-K of the Registrant filed with the Securities and
         Exchange Commission for the fiscal year ended August 31, 1994, File No.
         0-18091.

*10.4    RSI Holdings, Inc. Incentive Stock Award Plan, including an amendment:
         Incorporated by reference to Exhibit 10.8 to the 1990 Form 10-K.

*10.5    Amendment to Incentive Stock Award Plan: Incorporated by reference to
         Exhibit 10.8.1 to the 1992 Form 10-K.

10.6     Loan Agreement dated December 12, 1996 by and among the Company,
         CambridgeBanc, Inc. and First Union National Bank, together with
         related documents: Incorporated by reference to the Form 10-QSB of the
         Registrant filed with the Securities and Exchange Commission for the
         fiscal quarter ended November 30, 1996, File No. 0-18091.

10.7     First Amendment to Loan Agreement dated as of August 25, 1997 by and
         among the Company, HomeAdd Financial Corporation, and First Union
         National Bank.



<PAGE>   42

*10.8    Stock Option Agreement by and between the Registrant and C. C. Guy
         dated as of July 2, 1997.

*10.9    Stock Option Agreement by and between the Registrant and Charles M.
         Bolt dated as of July 2, 1997.

10.10    Lease Agreement by and between Hewitt Coleman Companies, Inc., Lessor
         and HomeAdd Financial Corporation, Lessee dated August 4, 1997.

10.11    Agreement by and between the Company and Fuller D. Tresca dated
         November 19, 1997.

21.      Subsidiaries of the Registrant.

23.      Consent of Ernst & Young LLP, Independent Auditors.

27.      Financial Data Schedule (For SEC use only)

99.      Consent Decree and Judgment dated December 31, 1991 entered by the
         United States District Court for the Northern District of California in
         Wiegmann & Rose International Corp., a South Carolina corporation
         ("Wiegmann & Rose"), plaintiff, v. NL Industries, Inc., a New Jersey
         corporation, and Esselte Pendaflex Corporation, a New York corporation,
         defendants; NL Industries, Inc., a New Jersey corporation, and Esselte
         Pendaflex Corporation, a New York corporation, third party plaintiffs,
         v. Triple A Machine Shop, Inc., a California corporation ("Triple A"),
         third party defendant, C.A. No. C-88-4817 FMS: Incorporated by
         reference to Exhibit 28.1 to the Registrant's Form 8-K, filed with the
         Securities and Exchange Commission on January 3, 1992, File No.
         0-18091.

99.1     Settlement Agreement and Release by and between Wiegmann & Rose, Delta
         Woodside Industries, Inc., formerly known as RSI Corporation, a South
         Carolina corporation and Triple A: Incorporated by reference to Exhibit
         99.1 to the Registrant's Form 8-K, filed with the Securities and
         Exchange Commission on November 18, 1996, File No. 0-18091.

* Management contract or compensatory plan required to be filed as an exhibit
  pursuant to Item 13 of Form 10-KSB.